$20,000 instant asset write-off (IAWO) here to stay

Eligible small businesses can continue to claim an immediate deduction for assets costing less than $20,000.

From 1 July 2026, the $20,000 instant asset write-off is permanent, giving eligible small businesses greater certainty when investing in assets.

If your business has an aggregated annual turnover of less than $10 million, you may be able to claim an immediate deduction for the business portion of eligible depreciating assets that:

• cost less than $20,000 and
• are first used, or installed ready for use, in an income year.

This IAWO can help improve cash flow and reduce compliance costs by allowing deductions to be claimed sooner.

What you need to know

• The $20,000 limit applies to each asset, so you can instantly claim multiple eligible assets, as long as each one costs less than $20,000.
• You may be able to claim an immediate deduction for eligible improvements or upgrades to existing assets, where the cost of the upgrade is less than $20,000.
• In most cases, both new and second-hand assets are eligible, although some exclusions and limits apply.
• If you previously chose not to use simplified depreciation rules, you can re-enter the regime until 30 June 2027, without waiting for the usual 5-year lock-out period.
• Assets costing $20,000 or more that can’t be immediately deducted can continue to be added into the general small business pool and depreciated at 15% in the first income year and 30% each income year after that.
• From 1 July 2026, the low-value pool threshold increased from $1,000 to $20,000.

How to claim

If you want to claim the IAWO, include the deduction in your tax return for the income year that the asset was first used, or installed ready for use.

Remember to keep good records to support your claim.

For more information, including eligibility criteria, exclusions and claim requirements, visit Instant asset write-off for eligible businesses.

You can also speak with a registered tax practitioner for advice.

Keep up to date

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Source: ATO